Confusion about "conscience"

Eric Bugyis and I share a respect for Stanley Hauerwas.  HIs reaction to the HHS contraception-mandate decision, though, is very different from mine.  "Obama defends conscience," he writes, by which it appears he means that the President, unlike the Catholic Church, respects the consciences of those who believe that it is not immoral to use contraceptives, including early-abortion-causing drugs.  He writes:

This is, of course, a victory for all those who care about the religious liberty of individuals and the freedom of individual conscience, which by definition is meant to be protected from the unwelcome coercion by institutions to do things (or not do things) that are not relevant to the performance of one’s explicit duties to them, including one’s employer. The Obama administration did offer one gratuitous concession to those religious institutions.

It is, "of course," not a victory for those who care about the religious liberty of individuals, and it is, in my view, Bugyis's thinking, and not the Bishops', whose thinking on this matter is regrettably "muddled."  (I am afraid that his suggestion that Archbishop Dolan would do well to take the year which the Administration has given him to prepare for the mandate's imposition to "reflect on what the concept of 'conscience' actually means" goes beyond mistake-making into unattractive and unworthy snark.)  The notion that the refusal of a religious institution to subsidize an another's activity to which the institution objects on moral grounds is meaningfully analogous to a legal, punishment-backed requirement that such an institution subsidize such activity is, again, confused.  The "coercion" involved in the mandate saga is the coercion by the government of religious objectors; the employers who do not want to pay for (even indirectly) their employees' contraception are not "coercing" those employees to do anything.  Bugyis thinks the Church fails to respect the consciences of those who reject the the Church's teaching on contraception but the Church is not fining such people for their unbelief.  (The claim of some that, because the government has declared that contraception-coverage is now -- because the government has declared it so -- a baseline entitlement, and so a refusal to subsidize is equivalent to a fine is cute, but unpersuasive.)   

Yes, a meaningful exemption could mean that employees of Catholic institutions who want to purchase and use contraception have to pay more, but policies which raise slightly the cost of an activity are not helpfully or even plausibly regarded as forbidding that activity or as coercing people to forbear from engaging in it.  (Never mind the fact that the government, if it wanted to, could easily subsidize the activity itself; but why bother when you can make religious employers do it?)  Yes, in a democracy, in a political community in which people disagree, it will sometimes be the case that some people and institutions will be required to comply with legal directives to which they object.  That's life.  But in a political community that cares about religious freedom (as ours does), we make efforts to specially accommodate religion-based objections, especially in cases where (as here) it is easy to do so.

Bugyis writes, "[a]s it stands, the bishops and other religious leaders seem intent on protecting their prerogative to coerce rather than counsel, and this is a slap in the faces of the faithful, who have already endured and forgiven so much loss of moral credibility among their clergy."  Again, the bishops are not "coercing" anyone, and the question whether the Church's teaching on contraception has been persuasive (to most people, obviously, it has not), should be entirely irrelevant to the question (I understand that it is relevant to the Administration's political calculations) whether a government that is constitutionally and culturally committed to religious freedom should make Catholic institutions subsidize employees' contraception.  At the end of the day, it seems to me that Bugyis welcomes the mandate out of something like spite, as a kind of justified punishment, or come-uppance, of the Church for its failure to confess error and reform in the direction he would like.  Very disappointing.